Banks are under rising pressure to find innovative ways to reduce costs and increase operational efficiencies. At the same time, the pandemic made it clear that banks could no longer put off modernizing legacy systems in order to deliver the products and services consumers now expect.
This is not to say that banks have been wholly resistant to the cloud. Prior to the pandemic, major banks like Bank of America made the decision to begin moving some of their operations to the cloud. While this change has presented numerous opportunities for cost savings and improved agility, it has also raised concerns about security, making other players hesitant to fully make the switch. Yet, recent advancements in cloud security technology are slowly bringing the hesitant players around, with more banks moving their operations to the cloud.
In this blog, we’ll take a look at some of the benefits of banking cloud security and why more banks are moving to the cloud. We’ll also explore some of the risks associated with banking in the cloud and how financial institutions can mitigate these risks while protecting data and other sensitive information.
What is Cloud Security for Financial Services?
Cloud security for financial services is a term used to describe the various measures taken to secure bank data and other sensitive information when it is stored or processed in the cloud. Cloud security solutions are designed to protect against a wide range of threats, including cyber-attacks, data breaches, and unauthorized access.
Cloud security solutions can be divided into three main categories:
- Infrastructure Security: This includes measures like firewalls, intrusion detection/prevention systems, and secure data storage.
- Operations Security: This includes things like access control, authentication, and authorization.
- Application Security: This includes measures like vulnerability scanning, penetration testing, and code reviews.
The way banks use the cloud is a different approach from other industries. One study conducted by Google Cloud with the Harris Poll found that 83 percent of financial services leaders reported that their companies relied on cloud technologies in some form. But a plurality (38 percent) are using hybrid cloud solutions, with smaller portions using single-cloud (28 percent) and multicloud (17 percent) solutions. For many banks, a hybrid approach works best as it allows banks to enjoy the security and control of the private cloud and the flexibility and scalability of the public cloud. For instance, banks can handle the issues associated with security and data privacy by building a hybrid cloud where important data is stored on private cloud and computing power resides in the public cloud.
Cloud banks offer a number of benefits for financial institutions, including cost savings, improved agility, and increased efficiency. However, as with any new technology, there are also risks associated with banking in the cloud. In order to fully capitalize on the benefits of the cloud while mitigating these risks, banks need to implement comprehensive cloud security solutions.
Top 8 Benefits of Cloud Security for the Banking Industry
There are many reasons why banks are moving to the cloud. Here are some of the most common motivators:
- Cost Savings – One of the primary drivers for bank migration to the cloud is the desire to cut costs. The cloud offers a number of advantages over traditional IT infrastructure, including reduced capital expenditures and operating costs.
- Increased Agility – In order to keep pace with the ever-changing demands of the consumer, banks need to be able to quickly and easily deploy new applications, services, and solutions with the latest tech (like machine learning). The cloud allows banks to do this by significantly reducing the time it takes to set up and deploy new systems.
- Increased Efficiency – Banks can also achieve increased operational efficiency by moving to the cloud. This is due in part to the fact that cloud-based solutions are often more scalable than traditional IT infrastructure, allowing banks to handle fluctuations in demand with ease.
- Enhanced Security – Perhaps one of the biggest concerns for banks when contemplating a move to the cloud is security. However, with the right security measures in place, data storage can be just as secure in the cloud as it is on premise.
- Better Scalability – In the past, bank scalability has been limited by the amount of physical infrastructure they could deploy. This is no longer an issue with the cloud. With the cloud, bank scalability is limited only by the available bandwidth and compute power.
- Enhanced Disaster Recovery – In the event of a natural disaster or other major outage, banks can quickly and easily switch over to their backup systems in the cloud. This gives banks greater resiliency in the face of disruptions.
- Reduced IT Complexity – By moving to the cloud, banks can simplify their IT infrastructure, which can lead to reduced costs and improved efficiency.
- Improved Compliance – The cloud offers a number of features that can help banks improve their compliance posture, including auditing, logging, and data encryption.
Challenges of Cloud Security
Compliance and security concerns have slowed growth for cloud solutions in the financial services industry, particularly for critical bank services, where concerns about managing security, privacy, and assets are highly precarious. Some of the main challenges of cloud security in banking include:
- Lack of Standards – There are no industry-wide standards for cloud security postures, which can make banks unsure of whether or not their data is properly protected when stored or processed in the cloud.
- New Operating Models – A cloud operating model is the collection of processes and procedures that define how you want to operate technology in the cloud. This model involves a more high level of operations than traditional IT operating models and can be difficult to define for organizations new to the cloud.
- Regulatory Compliance – Many bank regulations are geared toward traditional IT architectures, and are not well suited for the cloud. This can create compliance challenges for banks when migrating to the cloud.
- Data Security – Banks are responsible for ensuring the security of their customers’ data, regardless of where it is stored. This can be difficult to do in the cloud, where bank data is often co-mingled with data from other customers.
- Management Complexity – Managing security in the cloud can be more complex than managing security in a traditional IT infrastructure. Banks need to have a robust cloud security strategy in order to mitigate the risks associated with managing their cloud.
How Banks Can Mitigate Cloud Security Risks
Banks can follow a number of steps to mitigate the risks associated with banking in the cloud:
1. Establish Clear Security Policies – bank cloud security standards should be clear and concise, and should address topics like access control, data protection, and vulnerability management.
2. Implement Strong Security Controls – bank cloud security controls should be robust and comprehensive, and should cover areas like firewalls, intrusion detection/prevention systems, and secure data storage.
3. Train Employees on Security Best Practices – bank employees need to be aware of the security risks associated with the cloud, and should be trained on how to properly protect bank data when using it.
4. Regularly Monitor Cloud Security – bank cloud security should be monitored on a regular basis in order to identify and address any potential vulnerabilities.
Stefanini’s Cloud Computing Strategy
Our cross-functional team of experts work with you to ensure you’ve getting the maximum value out of your cloud, including cost savings, increased agility, and enhanced security. We’ll help you implement strong security controls and policies, and can act as an extension of you by regularly monitoring your cloud security.